On June 22, 2009 Yermolai Solzhenitsyn, Lenny Mendonca, Toby Gati, and Douglas Rediker gathered with Steve Clemons at the New America Foundation to discuss Russia’s economy and the newly released McKinsey Global Institute paper, Lean Russia: Sustaining Economic Growth Through Improved Productivity. This report asserts that future growth within Russia is contingent on new and increased investment and productivity.

Yermolai Solzhenitsyn, the director of the McKinsey & Company Moscow office, began by explaining that in the past ten years Russia has doubled its per capita GDP and that the country hopes to do so again by 2020.

While Mr. Solzhenitsyn believes that the impact of the global financial crisis is short-term, he mentioned the changing demographic and resulting diminished work force, the lack of investment of Russian money into Russian society, the insufficient managerial experience, and the absence of a comprehensive planning system as potential long-term obstacles that could prevent Russia from improving its productivity and achieving its economic goals.

Mr. Solzhenitsyn stressed the importance of organization, claiming that the gap between U.S. companies and Russian companies is largely due to the inferior organization of Russian industries. Toby Gati, a senior international advisor at Akin Gump Strauss Hauer & Feld, added that she views the McKinsey report not as a simple discussion of the Russian economy but as a discussion of “missed opportunities” due to Russia’s corruption, state bureaucracy, state corporations, and failed top down approach.

Douglas Rediker, the director of the New America Foundation’s Global Strategic Finance Initiative, emphasized that it is Russia’s management culture and systems of regulations and rules that must be reformed for change to occur. Mr. Rediker said that far too often, Russian businessmen rank political patronage over merit and feel threatened by changes to the system.

--Event summary by Caroline Esser, Intern, American Strategy Program